Reddit FTC Inquiry: On Friday, Reddit announced that the United States Federal Trade Commission is conducting an investigation into the company’s sale, licensing, and sharing of user-generated content with third parties to train artificial intelligence models.
Reddit said that, “They received the letter from the FTC on March 14 regarding the investigation into the company’s sale, licensing.”
Further, According to Reddit, “Considering the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC is interested in this area. We do not believe we have engaged in any unfair or deceptive trade practices.“
Reddit’s Strategic Moves in AI Training
In February, Reuters reported that, “Reddit had reached an agreement with Alphabet’s Google (GOOGL.O) to open a new tab to make its content available for training the search engine giant’s AI models.” The contract with Google is worth approximately $60 million per year and demonstrates how Reddit is looking to generate new revenue.
Moreover In the face of fierce competition for advertising Reddit might also have talked with TikTok and Meta Platform’s (META.O) for the same AI training purpose.
Earlier this week, Reddit announced that it was aiming for a valuation of up to $6.4 billion in its U.S. initial public offering, which make them one of the most anticipated stock market debuts in recent years.
Why it matters: This matters because, this news comes just a few days before Reddit’s much-anticipated initial public offering. Moreover, it states about the FTC is expanding its investigation into AI-related transactions.
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Lastly, Reddit isn’t the only company receiving these so-called “hold letters.” says FTC official who spoke with Axios Head.
